By Alex Hayes
Editor, International Relations & Geography Undergraduate
The nuclear accord between Iran and six world powers, including the United States, lifted certain international sanctions in exchange for a scaling back of Iran’s nuclear program. As a result of the agreement, tens of billions of dollars in previously frozen assets and oil revenue have been freed up. Soon after the deal was officially put into place, foreign investment began to pour into Iran as investors sought to finally take advantage of the potential of a country with a population similar to Germany’s.
While Iran has quickly taken advantage of the lifted sanctions, the nuclear deal has been under threat since the election of Donald Trump as president of the U.S. During his election campaign Trump repeatedly criticised the nuclear agreement, which had been agreed upon during the Obama presidency. After grudgingly agreeing to prolong the deal during the first ten months of his term, Trump finally issued his decision to “decertify” the deal, fittingly, on Friday October 13th. Despite “decertifying” the deal, the president stopped short of reapplying sanctions as he sought tougher requirements to be placed on Iran, a sign of the ongoing resistance to the administrations hardline stance with respect to Iran. While the U.S. Congress must still vote on whether to formally end American involvement in the accord by re-imposing sanctions, the future of the entire framework remains unclear, and Iran’s supreme leader, Ayatollah Ali Khamenei, has threatened to terminate the deal if the U.S. officially backs out. Trump’s demand to renegotiate the deal is unlikely to occur, as Rouhani stated that Iran would not be willing to add any amendments to the original deal.
In his speech on October 13th, Trump denounced Iran as the world’s leading state sponsor of terrorism, listing Iran’s various transgressions going all the way back to the 1979 hostage crisis. Yet despite Trump’s unequivocal depiction of Iran as an untrustworthy adversary, he failed to even get the full support of his own cabinet in wanting to leave the nuclear deal. Defence Secretary Jim Mattis and Secretary of State Rex Tillerson both stated that it was in the U.S. national interest to remain in the deal. Internationally, Russia, France, and the United Kingdom have all reaffirmed their commitment to the agreement and have warned the U.S. not to leave it. Trump has therefore effectively gone “rogue” in his quest against the deal, shunning the international community and even elements of his own cabinet in an effort to isolate Iran.
The nuclear agreement has already profoundly facilitated Iran’s efforts to modernise its economy and society. Samsung signed the first inward investment deal for a modern “mega hospital” in Iran. French oil company Total signed a $4.8 billion deal with Iran in July to develop its South Pars gas field. In the same month Iran’s state rail company, Islamic Republic of Iran Railways (IRIR), and its Italian counterpart, Ferrovie dello Stato (FS), signed an agreement worth $1.37 billion to build a high-speed railway between the cities of Qom and Arak. In September Quercus, a British renewable energy investment company, signed a deal with Iran’s energy ministry worth around $440 million that will lead to the construction of a 600-megawatt (MW) solar power plant in central Iran. The plant will rival the largest solar projects currently located in China, India and the U.S. All these developments have been put at risk as a result of the U.S.’ decertification of the deal.
Perhaps the most notable achievements have been made in the aviation industry, considering its previously archaic condition. Since the 1979 Iranian Revolution, international sanctions have restricted airlines in Iran from purchasing modern aircraft from abroad. Iran’s reliance on outdated Russian aircraft and parts has resulted in a fleet of aircraft that does not meet modern safety requirements. As of January 2017, of the 230 planes owned by Iran’s 15 airlines fewer than 160 are in service as the others have stopped flying due to a lack of spare parts. Iranian aviation has faced multiple accidents in recent decades due to this dated fleet. From 2005 to 2015 airlines in Iran experienced 16 accidents, resulting in 586 fatalities.
In December 2016, Iran Air finalized an $18 billion contract with Airbus for 100 new aircraft. Iran’s national carrier separately agreed to buy 80 planes from U.S. manufacturer Boeing for $16.6 billion at the end of 2016. These deals mark important milestones in the modernisation of Iran’s economy. Safer, more comfortable planes will improve Iran’s nascent tourism industry and enable the Iranian people to travel more efficiently. It will also help Iran compete in a market that is constantly opening up to new international competition. Not only have carriers from the Gulf and Turkey already secured 40 per cent of the market, international carriers such as Air France, British Airways, Lufthansa are also establishing a presence.
An American withdrawal from the nuclear deal would raise major questions about the future of the Iranian aviation industry. Would Boeing still be allowed to supply aircraft to Iran in such a situation? How would airlines in Iran be able to modernise their fleets without foreign investment? The future of the nuclear deal adds just another further layer of complexity to the Iranian commercial airline sector. In January of this year, Republican member of the House Peter Roskam introduced a bill entitled the “Iran Terror-Free Skies Act”. The passage of this bill would instigate an investigation by the U.S. Director of National Intelligence into Iran Air and Iran’s other airlines. If any of these carriers were found to facilitate the operations of the Iranian Revolutionary Guard Corps or foreign terrorist groups, the airline would be put on the U.S. sanctions list and be prohibited from acquiring new American aircraft or parts.
The airline industry is therefore inherently linked to issues of economic progress, passenger security, and state sponsored terrorism. Even if one of the planes bought by Iran was used to fly personnel or weapons to Hezbollah militants or Syrian army troops, major questions would be raised by the U.S. Other industries receiving foreign investment face similar scrutiny. Once the money enters Iran, the signatories of the deal cannot ensure that the investment is used for entirely benign functions. How will the development of the South Pars oil field – the world’s richest natural gas repository and key source of Iranian wealth – benefit Hezbollah, which serves as a proxy for Iran against Israel? Opponents of the nuclear deal question how the U.S. can continue to support the deal while still applying new sanctions against Iran due to its continued ballistic missile testing.
The U.S. and Iran will never be likely to reach an agreement on contentious issues such as Israel, ballistic missile defence testing, or the position of Kurdish minorities in the region. A rejection of the nuclear agreement would also energise the hardliners in Iran in their ideological battle against the U.S., at the expense of moderates such as Rouhani who seek a more conciliatory position with the Americans and their allies. It would only prove their view that the U.S. is an untrustworthy enemy, with a leader who opposes Iranian values and prosperity. A rejection of the deal would also invigorate the conservatives in the U.S., who see more sanctions as a way to control an Iran which they see as a threat to Israel and stability in the region. However, a continuation of the nuclear deal is important to fostering a greater cooperative relationship based on economic development and a demilitarised nuclear program in Iran. Continued foreign investment into industries such as healthcare, energy, automobile and aviation would benefit both the Iranian people and the globalised firms and countries seeking new markets. The ultimate question is how persuasive the divisive political rhetoric from an unpredictable American president will be to the future of tens of the more than 80 million Iranian people.
Image courtesy of HuffingtonPost